Proxy firm IiAS faults Rahul Bhatia’s leadership as IndiGo faces turbulence

Subscribe to enjoy similar stories. MUMBAI : Institutional Investor Advisory Services India Ltd (IiAS) has faulted IndiGo’s promoter and managing director (M), Rahul Bhatia, for not leading from the front when the airline is facing its most challenging operational episode, even as the influential proxy advisory firm has sought a review of the current board structure, which allows Bhatia to nominate half of the board.

Bhatia, who, along with his friend, Rakesh Gangwal, founded IndiGo in 2006, owns 35.7%, while the airline’s senior leadership, including chief executive officer Pieter Elbers, have faced a nationwide backlash for flight cancellations, halting the country’s booming aviation sector in the first week of December. “[A]s the only executive director on the board and the company’s promoter, it was expected of Rahul Bhatia to lead from the front, rather than from the sidelines," IiAS said in a note on Friday.

“Given that Rahul Bhatia’s role significantly overlaps with responsibilities typically assigned to a CEO, it is unclear how the Board has apportioned the responsibilities between the managing director and the CEO." IiAS also faulted the composition of the current board, noting that, according to the airline’s Articles of Association, the Bhatia-led InterGlobe Enterprises (IGE) Group has the authority to nominate five non-executive, non-independent directors, resulting in the nomination of half the board. IGE Group also retains the exclusive right to appoint the airline’s managing director, CEO and president, irrespective of its ownership level.

Mumbai-based IiAS pointed out that these rights continue even if IGE’s stake falls below 5%, though it currently holds 35.7%. “This creates a scenario where a